Benefits Blues: A Growing Epidemic Among U.S. Workers

How to cope with cutbacks in employer-provided health plans

Many working Americans have been dealt a blow from their employers that is hitting them in the wallet.

Carolyn, a business analyst in Atlanta, was referred for an MRI last month when her physician diagnosed her with retinal disease. Time was of the essence, but when Carolyn discovered her medical benefits did not cover the $900 expense, she hesitated. “Supposedly my insurance deductible has not yet been met,” Carolyn recalls.

Carolyn is struggling to manage her medical benefits, and she isn’t alone. An online survey from the National Endowment for Financial Education (NEFE), which was conducted by Harris Interactive and included 2,210 adults, finds that over the past five years, 40 percent of employed adults in the United States have seen their employee benefits packages decreased — or eliminated entirely. And for seven in 10 of the employees who have experienced cutbacks, health insurance coverage has been the hardest hit, resulting in higher deductibles, higher co-pays and costly premiums.

“Benefit cutbacks are yet another symptom of the ailing economy. Many Americans are struggling to absorb higher health-care costs in a time that they can ill afford to do so,” says Ted Beck, president and CEO of NEFE. “It also is concerning that in this climate of high unemployment many people who have jobs are staying put even though they are not fully satisfied with their employers.”

The NEFE survey finds that more than half (53 percent) of employed U.S. adults agree with the statement that they are staying in their current jobs instead of looking for new ones, even though they are unhappy with certain aspects of their jobs, such as salary, benefits and/or hours.

“People continue to struggle in this economy, and now they’re facing additional challenges of making ends meet with higher out-of-pocket health-care expenses, lower matches on employer-sponsored savings, and frozen wages,” adds Beck.

According to the NEFE study, 41 percent of employed adults who have seen their benefits packages decreased or eliminated have also had their salary increases suspended, and 33 percent have seen a decrease or end to matches from their employer-sponsored retirement savings plans.

NEFE says that unless the money employees are contributing to their retirement accounts could be used to avoid an extreme financial outcome — such as losing a house or car — it is a good idea to keep contributing to a 401(k) or 403(b) plan to maintain savings growth. Even if workers are saving a smaller amount than they have been accustomed to, they still are taking advantage of tax savings and are building a nest egg.

Workers who have experienced a decrease in a savings match from their employer might consider adjusting the amount they contribute to at least meet the minimum required to receive the match. And it’s important to remember that after the economic recovery takes hold and the financial health of companies improves, employers may reinstate matches.

“Workers who have experienced benefit cutbacks in their current employment may be tempted to think the grass is greener in another job. But it is important to stay indispensible at work, whether you are looking for a job now or waiting until the economy improves,” warns Beck.

NEFE suggests these tips to keep on the A-list at work:

Gather intelligence. Employees should learn the facts about the state of their industry and their company. Keeping up with industry news shows an employer that you’re engaged in the company and its future. Consider networking and joining professional organizations in your field as a representative of your company.

Make yourself indispensable. Businesses rarely make a random selection of which employees will be laid off: They want to keep workers who add value to the organization. Explore what you can offer your company beyond the scope of your current job. If you have untapped talents, now is the time to offer them.

Be flexible. Find an area in your company that needs assistance, and volunteer or request a transfer. Make yourself even more crucial to the team by taking on extra projects, staying late and volunteering to do the jobs no one else wants to do.

Communicate. Don’t be afraid to discuss fears with your employer. Find out what you need to do to keep your job. Present a positive attitude when communicating with your employer, and contribute to an outcome that will help improve your situation at work.

The survey was conducted online within the United States by Harris Interactive on behalf of the National Endowment for Financial Education from May 1-3, 2012, via its QuickQuerySM online omnibus service, interviewing 2,210 U.S. adults aged 18+, of whom 1,316 are employed. Data were weighed using propensity score weighting to be representative of the total U.S. adult population on basis of region, age within gender, education, household income, race/ethnicity and propensity to be online. No estimates of theoretical sampling error can be calculated; a full methodology is available by clicking here.

This material is provided by SmartAboutMoney.org, an NEFE site that helps people make sound decisions during all of life's financial challenges.